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Responding to some of President Obama’s Medicare claims

THE PRESIDENT: I saw how important things like Medicare and Social Security were in

[my grandparents’] lives. … That’s why, as President, my goal has been to strengthen these programs now, and preserve them for future generations. Because today’s seniors deserve that same peace of mind. And the millions of Americans who are working hard right now deserve to know that the care they need will be available when they need it.

Medicare, Social Security, and Medicaid are growing at unsustainable rates. The “millions of Americans who are working hard right now” are paying taxes into a system that will be unable to afford to pay the benefits it is promising them today. President Obama says these workers “deserve to know that the care they need will be available when they need it,” but he has not proposed policy changes to produce that outcome.

THE PRESIDENT: We’ve extended the life of Medicare by almost a decade.

No you haven’t. The Affordable Care Act (ACA, also known as “ObamaCare”) slowed Medicare spending growth. The Medicare Hospital Insurance Trust Fund includes less than half of Medicare spending. You can argue that you have extended the life of this trust fund by “almost a decade,” but trust fund accounting ignores a more immediate cash flow problem. Since the HI trust fund contains only IOUs from the government to itself, this accounting ignores the question of where to find the $296 B in cash this year to pay for Medicare spending above that covered by Medicare payroll taxes and premiums. Medicare has never been a fully self-funded program, and even with the savings enacted in the Affordable Care Act, it is still an enormous pressure on the rest of the budget.

And that’s the positive portrayal of what the President and his Congressional allies did, because at the same time they “cut” Medicare spending, they increased spending on new health entitlements in the ACA by the same amount. So the budgetary savings and reduced future deficits they legitimately achieved by slowing Medicare spending were then undone by new government spending. This is why Governor Romney and Mr. Ryan say the President “used Medicare savings to pay for [part of] ObamaCare.”

THE PRESIDENT: And I’ve proposed reforms that will save Medicare money by getting rid of wasteful spending in the health care system and reining in insurance companies – reforms that won’t touch your guaranteed Medicare benefits.

In his budget President Obama proposes to slow spending growth by about $[200] B over the next decades. He then proposes to spend that same amount increasing Medicare payments to doctors. His budget therefore proposes no net savings in Medicare.

In the grand bargain negotiations with Speaker Boehner last summer, the President proposed more significant incremental reforms (often mislabeled as “spending cuts”) to Medicare. Since then he has been unwilling to propose those changes publicly. Even if he did, they are far from sufficient to create a sustainable spending path.

THE PRESIDENT: Republicans in Congress want to turn Medicare into a voucher program. That means that instead of being guaranteed Medicare, seniors would get a voucher to buy insurance, but it wouldn’t keep up with costs.

A version of this horrible voucher system described by the President is now in effect for more than 100 million Americans who get their health insurance through work, and will, if President Obama is reelected, take effect soon for millions more under the Affordable Care Act. The phrase “seniors would get a voucher” is designed to maximize fear among today’s seniors, especially those who vote in Florida.

(photo credit: White House photo by Chuck Kennedy)

The President is correct that “Republicans in Congress” proposed reforming Medicare such that old-style government-run Medicare would not be an option for new Medicare enrollees in the future, but the latest version of Republican reform is the Ryan/Wyden plan, which would allow seniors to choose to stay in traditional fee-for-service Medicare. The President appears to be trying to scare today’s seniors by describing an out-of-date proposal that would have only applied to future seniors.

THE PRESIDENT: As a result, one plan would force seniors to pay an extra $6,400 a year for the same benefits they get now.

This is a great example of a tactic I warned about two weeks ago:

[me]: Every “cut program X by Y%” quote about the Ryan budget will be relative to an unsustainable spending path. The irresponsible part isn’t the proposed spending cut, it’s the promise to keep spending growth going without specifying how you’ll pay for it.

The following chestnut returns as well:

THE PRESIDENT: And it would effectively end Medicare as we know it.

Technically, to end Medicare as we know it simply means to change Medicare. Campaigning Democrats use this language, “end Medicare as we know it” to scare the listener when describing Republican proposals. To the untrained ear it sounds a lot like “end Medicare,” and the speaker uses it to mislead the listener into thinking his or her opponent proposes to eliminate this popular program. In reality, most Republicans elected officials want to end ObamaCare but only to change Medicare.

THE PRESIDENT: [Medicare is] about a promise this country made to our seniors that says if you put in a lifetime of hard work, you shouldn’t lose your home or your life savings just because you get sick… I’m willing to work with anyone to keep improving the current system, but I refuse to do anything that undermines the basic idea of Medicare as a guarantee for seniors who get sick.

This is interesting – I think it’s fairly new language for him. It provokes a few reactions.

What about losing some of your life savings if you get sick if you’re wealthy? Given that Medicare spending is both unsustainable and a transfer of resources from younger workers to older retirees, I think it makes sense to slow Medicare spending growth in part by reducing the subsidies for future seniors who are wealthy.

The “undermin[ing] the basic idea of Medicare as a guarantee” point ties back to the voucher attack, an attack which is now out of date because of Ryan/Wyden.

The Medicare guarantee that the President trumpets is significantly weakened by the President’s unwillingness to explain how he intends to extend that guarantee into the future. Under current law Medicare benefits are not guaranteed for future generations because the President has not proposed and Congress has note enacted changes to Medicare that produce a reliable guarantee.

America needs to slow significantly the growth rate of government spending on the major old age entitlements. Language such as that used by President Obama may scare some seniors into voting for him, but it will make needed reforms that much more difficult after the election.